The resilience of small business and the American entrepreneurial spirit are phenomenal. However, there will continue in 2013 to be bifurcation into business leaders and laggards.
(the stock chart highlights the growth of market leaders above the DOW JONES and NASDAQ).
Market bifurcation will be especially prevalent for “No Man’s Land” businesses with 25 to 500 employees due to the rising costs and complexities of doing business. Our greatest assets – innovation, our entrepreneurial spirit, labor productivity and the ability to get work done – will continue to separate leaders from laggards.
Both slow growth and growth risks are real concerns for business owners. Debt, uncertainty, rising costs of insurance, taxes and tax regulations, and the complexities of "hiring" and "firing", dictate that businesses do not
reverse their growth trajectory on a dime.
If Google's stock price is down because Wall Street sees that its future has not changed at all in the last year; what is causing enthusiasm for your company?
Houston 2012 Economic Recap:
· Recorded 2.7 million payroll jobs in September 2012, more than the job counts of 33 U.S. states, including Arizona, Maryland and Colorado.
· Houston added 96,600 jobs in the 12 months ending September ’12. The region’s 3.7 percent annual growth rate exceeds that of all other major U.S. metros.
· Trade flow continues to drive the Houston economy as more than $186.2 billion in foreign trade passed through the Houston-Galveston Customs District in the first eight months of ’12, a 5.7 percent increase from $176.1 billion handled during the same period in ’11. Exports totaled $83.2 billion, up 7.7 percent from $77.3 billion during the same period last year. Imports totaled $102.9 billion, up 4.2 percent from $98.8 billion last year.
Houston has the fastest growing metropolitan economy in North America. When compared to the world’s 300 largest metropolitan economies, Houston ranked as the 40th fastest-growing economy worldwide.
2013 Economic Forecast:
- Regulations & Burdens. While Washington’s political gridlock will continue; rising health, regulatory, and labor costs will continue to increase creating increased burdens for small business.
- Economic Growth. The fast growth days of 20%+ organic growth are now over for the majority of small businesses. In the United States, GDP growth is projected at 2% in 2013 before rising to 2.8% in 2014. Monthly job growth in 2013 is expected to average 155,000 nonfarm payroll (source: ABE Survey Sees Tepid Growth Through 2013 - 24/7 Wall St).
- Job Growth. Health, Government, Education, and Public Services will account for 6 out of 10 new jobs created in the new economy. To attract talent small business will have to provide a “superior work-life” experience to attract the human capital to be successful.
- Changing Workplace Demographics. We must adapt to the changing demographics in the consumer base including Millenials social work habits, baby boomers succession planning, and the increased diversity of consumers including the Latino and Asian communities.
- Growth Capital. Lack of availability of capital will continue for all asset light businesses except for branded sector leaders. The current risk aversion among global financiers is so risk adverse that it is impossible for small and mid-size business to get financing without a sponsor.
- Spending Economics. The frequency of reported corporate capital spending outlays over the past 6 months rose 3 points to 54%, still in “maintenance mode.” Of those making expenditures, 37% reported spending on new equipment (up 3 points), 19% acquired assets (up 3 points), and 14% improved or expanded facilities (unchanged). Six percent acquired new buildings or land for expansion (up 2 points). Overall, there was no sign that capital spending might be returning to levels more consistent with past recovery periods. The percent of owners planning capital outlays in the next 3 to 6 months rose one point to 22%. Overall, the survey shows no improvements in the capital spending indicators.
Revenue Growth Strategies for 2013 & Beyond
Knowing that you have a solid business (which your employees depend upon) and knowing that you cannot borrow money in this risk adverse climate, and facing increasing business complexities and costs; to prepare for 2013 business must prepare for revenue growth or risk losing the business.
Of course business cannot grow without change. For companies “too small to be big” and “too big to be small”, the right growth strategy is key to managing the difficult transition from small to big required to ensure wealth is created.
Dr. Gary Kunkle, Founder of Outlier LLC, has demonstrated that roughly 1% of companies create nearly 80% of all new jobs at the U.S. state level. These exceptional firms are more likely than any others to sustain growth over multiple years, and are better positioned to survive and thrive during recessions than average firms. To be a one percenter in 2013 whether you are focused on adding new service channels, improving customer experiences, or refocusing the firm on offering new solutions, keep in mind that we have moved from short-term survival model to a long-term strategy game. We are at the place where companies must find ways to create critical differentiators for their customers and find ways to move higher up the corporate value chain.
We’ve also been swimming in a pretty stagnant market since the 2008 crash, and we’re only now just seeing branded sector leaders realize the benefits of their transformation initiatives.
Everyone wants to grow exponentially at 20%+ a year without having to make radical changes to their business models. I predict the future is going to be less about selling the low-end work, but the more complex solution enabled business processes that are specific to industries (i.e. industry preconfigured solutions).
Getting Started Planning for 2013
Ask an analyst or consultant to write about what differentiates your company. The market at the low-end is very commodity driven these days, and there simply isn’t the room for all these providers. Differentiate, Differentiate,, Differentiate.
Through the downturn, strategic buyers improved their operating efficiencies and reinvested in their business, making them not only stronger performers but receptacles for talent and other add-on business and capabilities. Buyers will be looking for strong niche performers that don’t have all the pieces in place.
To "thrive", rather than "to survive" there must be a pragmatic plan for revenue growth. Our current economic situation commands change, decisive and overt actions to be taken in order to “THRIVE” in 2013 and beyond.
Read more:
· Houston Economy at a Glance
· Houston Economic Indicators
· Houston Hispanic Chamber Business Links
· Ephor Group Small Business Economic Forecast
· Small Business Problems & Priorities
